A federal judge in Kalamazoo on Thursday dismissed the case. Details weren't immediately released.
Birds Eye Foods was accused of spoiling groundwater by spraying wastewater for years onto fields in the Fennville area, 50 miles southwest of Grand Rapids. The cannery produces fruit fillings, sauces and glazes.
Douglas A. Donnell, a lawyer for Birds Eye, said the settlement "made sense on both sides."
Todd Ommen, a lawyer for the residents, said those involved had been working toward an agreement.
The lawsuit said the company should have known about the dangers of spraying wastewater laced with chemicals. A new treatment system was announced in 2010.